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Many factors can affect the pound to euro exchange rate
sterling woes

Pound to euro exchange rate – Sterling sinks to eight-month low after BoE warning over EU trade

The pound has dropped to its lowest rate against the euro since November last years following concerns over post-Brexit trade

STERLING has plunged to its lowest level against the Euro in eight months this morning following warnings over the post-Brexit economy by Bank of England deputy governor Ben Broadbent.

The pound fell to €1.1190 - a further drop of 0.12 per cent after sterling plummeted yesterday afternoon - and is now at its lowest rate against the euro since November last year.

 Many factors can affect the pound to euro exchange rate
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Many factors can affect the pound to euro exchange rateCredit: Getty Images

The drop came after the deputy governor of the BoE warned both the UK and the EU would see its economies suffer through a decrease in trade post-Brexit.

In a speech in Aberdeen, Mr Broadbent said: "Put simply, a significant curtailment of trade with Europe would force the UK to shift away from producing the things it’s been relatively good at, and therefore tends to export to the EU, and towards the things it currently imports and is relatively less good at."

He added that if the UK left the Eu single market it would likely lead to "lower UK income".

Sterling has lost around 17 per cent against the dollar and 15 per cent against the euro since Britain voted to quit the EU last June, though it has recovered some ground since hitting 31-year lows last October.

 Sterling has plunged against the euro over the last 24 hours
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Sterling has plunged against the euro over the last 24 hours

The best rates can often be found at specialist online outlets, such as Travelex, which can deliver your cash to home.

Moneycorp provides a reserve and collect service, through which costumers can reserve currency at the best online rate and collect it at one of moneycorp’s bureaux.

Travellers can use comparison sites, such as MoneySavingExpert's TravelMoneyMax, to find the best rate.

If you order in advance and pick up the cash then you'll get a better rate than if you walk in.

Your can also buy last-minute currency at the airport, but expect to be hit with poor rates.

The rates you'll see above are the "spot" currency rate that is traded on the market. These are different to the rates offered by money changers - but changes in these rates do have an affect on how much cash you get.

How to get the best holiday money rate

WE spoke with Hannah Maundrell, editor-in-chief at money.co.uk to find out how you can guarantee the best rate when you go on holiday

  • Don’t buy cash at the airport – you’ll always be able to beat the rate with a bit of forward planning
  • Compare travel money companies online Factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
  • Use comparison tools – MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
  • Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
  • Top up a prepaid card to lock in your rate now – Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
  • Always choose to pay in the local currency rather than sterling – This will help you avoid sneaky exchange fees

What is the Bank of England interest rate?

The UK interest rate – known as the base rate – is set by the Bank of England for lending to other banks and it used as the benchmark for interest rates generally.

It may affect interest you pay on loans, or receive on savings accounts. The BoE’s monetary policy committee (MPC) sets rates and has said previously that it’s in no rush to push them up.

But many economists have said that rocketing inflation could put pressure on the BoE to take action and put up rates.

Last August in the wake of the Brexit vote, policymakers voted to cut interest rates from 0.5 per cent to 0.25 per cent.

The move aimed to stimulate economic growth by encouraging people to spend.

But Mr Carney’s latest comments have been seen as a sign that interest rates may soon be raised back to 0.5 per cent.

 Mark Carney, governor of the Bank of England, comments on interest rate rises have led to a boost in the pound's value
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Mark Carney, governor of the Bank of England, comments on interest rate rises have led to a boost in the pound's valueCredit: EPA

How do interest rates affect the pound to euro exchange rate?

Reducing interest rates means it is less attractive to save money in the UK, meaning the value falls as Sterling is less in demand.

But suggestions that the Bank of England could raise the base rate again has given the pound a rocket boost.

Chief banker Mr Carney said “some removal of monetary stimulus is likely to become necessary".

He said the Bank 's rate-setters, the Monetary Policy Committee (MPC), will have to weigh up the case for a hike in the coming months, said the chief policymaker.

The MPC voted to keep the interest rates unchanged at 0.25 per cent earlier in June, but soaring inflation pushed three of its nine members to vote for a rate rise.

What other things affect the pound to euro exchange?

Foreign exchange rates are constantly changing. All the time.

One of the main factors is the economy. So, for example, when the Bank of England makes a statement or if interest rates change.

It is usually affected when the Office for National Statistics reveals inflation rates or when employment figures are announced.

The pound is also sensitive to political changes, for example, during the EU referendum or if the Prime Minister calls a snap election.

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